Audit Committee

Purpose

The Audit Committee is to be a preparatory organ related to the Board’s management and supervisory duties concerning external financial reporting, internal control systems related to financial reporting and external audit, with the clarifications and limitations of this charter.

The Committee is appointed by, and reports to, the Board.

The Committee supports the Board in the administration and execution of its supervisory responsibilities in accordance with:

The current provisions of the Public Companies Act, Accounting Act and Norwegian Securities Act
Prevailing standards for stock exchange listing on stock exchanges where the Company’s shares are listed
Recommendations provided in the Norwegian Code of Corporate Governance, Chapter 10

On this basis the Committee shall consider:

• The integrity of the company’s external financial reporting
• The company’s procedures for external financial reporting and control
• The company’s system for risk management and value-related and financial consequences of the main risk exposures in the company
• The external auditor’s qualifications, independence and work performance

Internal Audit plans and conducted audits for areas that are defined to be within the area of financial reporting and control.

Organization 

The Board appoints at least three members to the Audit Committee amongst its own members, and one of these will be nominated Chairman of the Committee. The Audit Committee’s members are nominated for a period of two years.

Each Committee member shall not be associated with any relations that, according to the Boards opinion, may be an impediment to his or her independent assessment capability as a member of the Committee.

When appointing Committee members, the Board shall ensure that the nominee has the necessary knowledge about basic financial and accounting work routines, internal control and accounting principles.

The Head of Internal Audit, as well as the Accounting Director, can, based on their own judgement, report issues directly to the Audit Committee.

The Head of Internal Audit is the Committee Secretary.

Meetings

The Audit Committee shall meet in connection with quarterly and yearly external financial reporting, or as often as the Committee finds it necessary.

The Audit Committee decides which of the Company’s representatives attend the meetings. It is assumed that the Company’s CFO attend all meetings.

External auditors attend the meetings in conjunction with relevant items on the agenda.

Each regular meeting will conclude with a special section for committee members only.

The committee will meet with, respectively, the Company's CEO, CFO, Head of Internal and External Auditors at least once a year with no other than the Committee itself present.

Responsibilities

The responsibilities of the Committee encompasses the following:

Supervision of the integrity of the Company’s accounts, the process for financial reporting and internal control over financial reporting.

The Committee shall:

• Discuss the management control systems linked to risk factors in the Company and understand the consequences of the main risk exposures, in general. Assess the risks associated with financial reporting, specifically.
• At least once a year, together with management and external auditors, discuss (a) the Company's procedures and requirements for external financial reporting, (b) the quality, adequacy, efficiency and effectiveness of controls and procedures designed to ensure that all relevant financial information is timely reported by the company (including any material deficiencies), and (c) the Company's internal controls related to financial reporting (including any material deficiencies).
• Together with management and external auditors to go through (a) important accounting principles and  practices applied by the company and (b) alternative accounting methods.
• Review the external auditors' plans and scope of the audit and the results of the external auditor's audit of financial statements.
• Be involved in advance of all press releases relating to financial reporting, including "profit warning".
• Supervise the relation to the external auditor

The Committee shall:

• Assist the Board in the choice of external auditor for Yara International ASA at the General Assembly.
• Assess and suggest to the Board external auditor fees for auditing Yara International ASA, which shall be determined at the General Assembly.
• Ensure that the external auditor does not perform services that are inconsistent with the role of external auditors. Review, together with the external auditor, the procedures for the external auditors' provision of services other than auditing. At least once a year review detailed documentation of the actual scope of such services supplied.
• Evaluate the external auditor’s qualifications, work performance and independence.
• Supervise that the external auditor complies with the requirements of rotating the members of the audit team.

Handling of complaints

The Committee shall establish and enforce procedures for receiving, storing and managing complaints related to financial reporting, internal control over financial reporting or auditing, including procedures for confidential and anonymous submissions by Company employees regarding issues related to financial reporting and/or auditing.

Supervising internal audit

The Committee shall:

• At least once a year evaluate the adequacy of the internal audit system in relation to internal control over external financial reporting.
• Regularly evaluate the performance of the work of the internal audit function related to areas within the mandate of the Committee.
• Supervise the Management’s decision of employing of the Head of Internal Audit, including decisions related to employment, dismissal and remuneration.

Fraud and corruption

The committee shall be informed of, and consider, all cases of fraud and corruption involving employees of the Company.

Management shall, at least once a year, submit a list of registered cases with a description of the system used to detect and handle such events. In severe cases, management shall present the case separately for the Committee.

Performance evaluation

The Audit Committee should assess its own performance annually.

The Committee will base its work on the assumption that the external auditors and the Head of Internal Audit have made the Committee aware of any issues considered important for the Committee in performance of its tasks as defined in the paragraphs 4.1 to 4.5.

Authority

As part of carrying out its mandate, the Committee is entitled to inquire about all activities and matters related to the Company’s business. The Committee is also given the right to demand access to information, facilities and personnel from the CEO.

The Audit Committee can carry out any investigations considered necessary in order to perform its duties, and may employ the Company’s internal auditor, external auditors and external consultants in this regard.

Reporting

Minutes of Committee meetings shall be made  available to all Board members as soon as is possible, and no later than at the second subsequent board meeting.

It is assumed that the Committee's Chairman reports orally on the issues that have been considered at the previous Committee meeting, provided there is no complete protocol.

The Board may, at any time, require a more detailed oral or written report from the Committee.

Limitation of the role of the Committee

The Committee is responsible only to the Board in connection with the execution of its duties. The Board has the sole responsibility of the duties of the Committee.

The CEO is responsible for preparing and presenting the Company’s external financial annual and quarterly reports to the Board. The external auditor is responsible for auditing and reviewing these reports. On request from the Board, the external auditor can perform a limited audit of the Company’s quarterly financial statements. When performing its duties, the Committee does not give any expert opinions, nor any other statement, concerning the Company’s accounts or professional approval of the external auditors work to anyone but the Board.

The Committee shall not consider:

• Risk factors or processes related to non-financial areas. This shall not preclude the Committee to be informed about possible financial consequences of such risk factors (such as explosion risks).
• Internal audit work regarding processes related to non-financial factors.
• Compliance with laws and regulations in areas other than the financial.
• Ethical issues in areas other than in connection with financial issues and processes.

These areas are under other supervisory functions and are not reported to the Committee, but directly to the Board.

Ownership and review cycle (technical information, not part of the Mandate.

The mandate is adopted by the Board in Norwegian, see Mandat for Styrets Revisjonsutvalg.  This document is an unofficial translation maintained by the Head of Internal Audit.